The International Monetary Fund (IMF) has announced that it has reached an agreement on a loan program review with Sri Lanka, making approximately $344 million available to support the country’s economic reforms. This development comes after Sri Lanka defaulted on its foreign debt of $46 billion in April 2022 due to a lack of foreign exchange to finance essential imports like food, fuel, and medicines.
The previous government had secured a $3 billion, four-year bailout loan from the IMF and initiated a reform process that involved cutting subsidies and increasing taxes to stabilize the economy. These reforms have continued under the new leftist administration of President Anura Kumara Dissanayake.
IMF Sri Lanka mission chief Evan Papageorgiou praised Sri Lanka’s reform agenda, highlighting the country’s impressive post-crisis growth rebound of five percent in 2024. He commended the substantial fiscal reforms, improved revenues, official reserves reaching $6.5 billion, and nearing completion of the debt restructuring process.
Once approved by the IMF’s executive board, the agreement reached on Friday will provide around $344 million in much-needed funds to support the Sri Lankan economy. This additional funding will bring the total disbursed under the current program to approximately $1.7 billion.
It is evident that Sri Lanka’s commitment to implementing reform measures has yielded positive outcomes, as acknowledged by the IMF. The country’s economic stability and growth prospects are looking promising with the support of international financial institutions like the IMF.
This news underscores the importance of ongoing economic reforms and international cooperation in addressing financial challenges and fostering sustainable growth in Sri Lanka. The country’s efforts to navigate through its economic difficulties are crucial for ensuring a stable and prosperous future for its citizens.
